The
cost of medical services rise each year faster than the rate of inflation.
There are many reasons for this, but one primary reason, seldom discussed,
is the effect of Medicare on those costs. Because any change to the
Medicare entitlement brings with it shrieks that the sky will fall,
no serious free market alternative has ever been entertained in Congress.
Nevertheless, if we are to avoid destroying the American economy by
saddling the nation with insurmountable debt, there is but one true
alternative to Obamacare and that is a true free market in medical services.

Medicare
is the archetypical example of socialized medicine that Obamacare will
promote and expand. Under Medicare, insurance carriers under contract
with the Center for Medicaid and Medicare Services, lord over physicians
and hospitals dictating the kind of care that can be provided and the
costs that can be imposed. The limitations on kind of care create a
one-size-fits-all approach to Medicine for just about everyone 65 and
older. Repeatedly those who are chronically ill fall through the cracks
and receive less than optimal care because the carriers hamstring the
physicians who dare not deviate from parameters of Medicare covered
services or they may suffer a Medicare audit. Medicare audits are the
federal government’s equivalent of the Spanish Inquisition. Because
there are no clear guidelines on what constitutes “adequate”
recordkeeping, no physician in the United States can survive a Medicare
audit if the carrier wants to recoup monies paid from the physician.
There is always a way to construe the record keeping as sub par and
to demand reimbursement. Medicare applies a statistical extrapolation
to the universe of patient files from a small subset audited. So it
is not uncommon for ten thousand dollars of Medicare payments to the
physician thought wrongly paid to be multiplied ten or twenty times
with the resulting figure constituting the reimbursement demand.

Medicare
sets the amount of money a physician will be paid for every Medicare
covered service and, unless the physician opts out of the Medicare system
entirely (effectively reducing his patient practice to those not on
Medicare), he cannot contract privately with any Medicare beneficiary
to provide a service other than ones Medicare covered or to receive
payment other than that allowed by Medicare. Medicare has a firm chock
hold, in other words.

Because
Medicare pays for all or almost all of the cost of covered services
for the patient, the patient has little incentive to do anything to
prevent the onset of diseases or to avoid visiting the hospital for
care of less than urgent health matters. Because Medicare promises to
cover these costs, few entering senior years have set aside money to
cover anticipated costs of health care. The effect is enormously inflationary.
Resort to services is almost unlimited, yet the cost capable of recoupment
by the institutions providing care fails to meet the actual costs of
the care. The distortion of market forces is significant. To recoup,
physicians and hospitals try to charge more for other services provided
that are not covered by Medicare. So those not in the Medicare system
pay more and those in the Medicare system tend to pay more for items
outside of Medicare.

The solution to this broken system is not to centralize and expand it
as Obamacare promises but to dismantle and replace it. That requires
courage from political leaders, a trait they notoriously lack. Consider
the alternative to socialized medicine.

There
are at least four systemic problems that beset the current health care
system that, if removed, would usher in lower costs of service, high
quality care, and vast improvements in the health of the American people.
As you will see, the current system, which already is socialized through
Medicare for everyone 65 and older (i.e., for the part of the population
that relies on medical services the most) not only fails to provide
adequate medical care, it also reduces life expectancy, while the free
market alternative does the opposite--provides superior care and extends
life expectancy.

(1)
Socialized medicine creates unlimited demand for medical services. That
ensures public reliance on the system to exceed resources and causes
those in true need of urgent care to enter cues and have to wait for
what may be care that if delayed will cause permanent injury or death.

(2)
Socialized medicine destroys innovation in medicine. The key to effective
medical care is treatment tailored to address the peculiar characteristics
of each person’s condition. Disease does not conform itself to
bureaucracy. A bureaucrat loves set definitions and parameters. Diseases
mutate and express themselves in varied ways within the bodies of each
person. Each person comes with a host of variables that influence disease
expression and progression. A one-size-fits-all approach to medicine
fails because it either provides too much, too little, or insufficiently
tailored care to the patient. The Medicare system removes the incentive
for physicians to come to know each patient intimately. It is enough,
under Medicare, to diagnose the condition and then prescribe the services
that Medicare will allow (the ones that the high school educated and
non-physician representatives at the carrier will allow the physician
to perform on the patient). Physicians are terrified of innovation.
Innovation, i.e., deviating from the Medicare prescribed and recommended
course, may lead to a Medicare audit (which could threaten the viability
of a medical practice). So, innovation is avoided for physician survival
in Medicare’s bureaucratic system.

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(3)
Socialized medicine destroys quality medical care. When the kind of
care a doctor provides is the product of coercion and cajoling from
bureaucrats working for or on behalf of the federal government, that
care is anything but the best. Quality medical care not only depends
on innovation in medicine but also, and perhaps most especially, on
close interaction between the physician and the patient along with diligent
effort by the physician to ferret out the peculiarities of the disease
and find the best available means to reduce or eliminate symptomology
and halt disease progression.

(4)
Socialized medicine eliminates incentives for personal responsibility.
When a system offers a free good that everyone will need at one point
or another, even when that system is suboptimal, the incentive to reduce
known health risks and to save for catastrophic emergencies is reduced
or eliminated. The current system depends on crisis management. Few
will take simple steps every day to reduce the risk of disease because
doing so may require loss of time or money and, in any event, there
is no financial reward for doing so. If I buy expensive exercise equipment,
hire a trainer, or seek expert advice on my diet, I will be out that
money presently but will not experience any change in the costs associated
with future medical care. There is no financial reward but there is
a cost. Consequently, most of us plod along variously doing that which
we should not leading ineluctably to a major medical crisis that may
have been prevented. Socialized medicine invariably becomes bogged down
with urgently needed care and fails to provide services that could reduce
or eliminate the need for urgent care in many circumstances.

Although
we are up to our neck in the failed waters of medical socialism, we
do not need to drown. We can extricate ourselves by adopting a free
market alternative. Taking that step requires courage our political
leaders, with the exception of Ron Paul, appear unwilling to take. Here
are four steps to bring about a free market in medical care in America:

1-
Phase Medicare out of existence over the next ten years; phase in over
that same period tax exempt status for health care institutions that,
and physicians who, provide private insurance plans to patients (competitive
with existing health insurance) in lieu of, or as compliments to, those
plans for the coverage of part or all of the medical expenses associated
with the provision of care by those health care institutions or those
physicians;

2-
Eliminate taxation equal in amount to payments from any health care
institution, any business or individual to funds exclusively designed
to provide contemporaneous drawn down electronic payments for the delivery
of medical services to an indigent patient by medical institutions and
physicians;

3-
Exempt from taxation all funds invested by any taxpayer in a medical
savings account for the taxpayer if an individual or for employees if
a business entity;

4-
Exempt from taxation all funds paid by a taxpayer for a health insurance
plan either directly or through an employer;

5-
Exempt from taxation all earnings of any business that are paid into
employee health insurance plans that provide catastrophic coverage;

6-
Provide a tax credit for each taxpayer who is certified by a physician
not to smoke, drink alcohol, or use drugs except by prescription for
each year that the taxpayer abstains from using these substances and
is free of diseases associated with smoking, alcohol, and illicit drug
use.

In
addition to these changes, it would be wise to encourage deregulation
of state licensing of health professions such that hospitals and physicians
would be able to enter into private contracts for health care services
with unlicensed individuals who have served as apprentices under licensed
practitioners and are trained in the provision of medical services and
who will serve in hospitals and in physician’s offices and operate
under the supervision of physicians.

In
this way, unlicensed apprentices skilled in the provision of specific
medical services who require less compensation than licensed practitioners
would be allowed to replace them in the provision of those services
as a hospital or physician directs with the latter equally liable for
negligence or malfeasance of the former. The effect would be to create
greater competition in the provision of services by allowing skilled
but non-licensed assistants to provide services within their skill set
and to reduce costs associated with the provision of select services.

These
are a few of innumerable options to wean the nation of socialized medicine
and return it to free market health care. If we were to adopt serious
free market reforms, Americans would take greater responsibility for
their own health, demand would lessen, costs for services would come
down, the quality of care would increase, and the longevity of Americans
would increase.

Jonathan W. Emord
is an attorney who practices constitutional and administrative law before
the federal courts and agencies. Congressman Ron Paul calls Jonathan “a
hero of the health freedom revolution.” He has defeated the FDA
in federal court a remarkable six times, four times on First Amendment
grounds. He is the author of The
Rise of Tyranny.